jim brunke brunke & associates, llc national and international aerospace consulting strategic...

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting

Strategic Thinking and Implementation


Jim [email protected]

425-922-0094

mailto:[email protected]


Challenges• Secy Gates –

– “We have specifically chosen to target the $101B savings during 2012-2016 POM across the entire Defense Budget, to minimize adverse impact.“

– “2/3 must come from structural savings that are repeatable year after year.“

– "It is not lost upon us that we are facing daily growing pressure targeting Defense funding from the Deficit Commission; mid-term Congressional elections; Tea Party; etc. Even Senator Inouye recently conceded to bi-partisan pressure, to cut an additional $8B from Senate's 2011 Defense Appropriations Bill.“

• Iraq/Afghanistan– Current– Reset/Recap

• 2008 GAO Study – Average cost overrun of 72 DoD programs – 40%Innovate, Innovate, Evolve, Evolve……..Flawlessly


What Are The Implications?

• What is most likely to be cut?• How will the changes affect the macro environment?• How will the changes affect your operations?• What will happen to industry?• What are the big paradigm shifts?


Innovation is Critical to Compete in the 21st Century…

Top Innovation Priorities: Extend the ability to collaborate inside &

outside Innovate business models & processes Leverage information for business

optimization

87% of CEO’s believe fundamental change is required in next two years to drive innovation

Innovation will shift from top-down to bottom-up within enterprises

More user input More spontaneous More collaboration on product

development

Future productivity will largely come from the way people innovate, the efficiency with which they can translate innovation into value and how effectively people can work together to make timely well informed decisions


What is Strategy and Why Have One?

A Strategy– Is Simple Is Clear Everyone Connects Keeps Leadership On Track Fits with the Upper Enterprise Strategy

A Strategy Includes – DirectionBoundariesConsiderations

A good strategy capitalizes on the core purpose of the organization, its shared values, what makes it unique and different and why


What Should a Good Strategy Consider?

Issues and Challenges

Desired Results Values Behaviors Metrics

A Strategy Is Part Of An Overall System


The Four Step Process

Concrete Phenomena Grouping Abstraction

Determination of Approach (Very Concrete

and Specific)

•Increase in average age

•Seniority system of promotion

•Low mobility of personnel among divisions

•Increase in number of managers

•Decline in morale among younger employees

•Increase in personnel costs

•Delays in new product development

•Fall in profitability

•Increase in unprofitable products

Personnel Problems

Cost Problems

Strategic Problems

Inflexibility in Human Resource Management

Costs Higher Than Industry Trends

Inflexibility in Corporate Strategy

HR Plan

Cost Reduction Plan

Re-assess Corporate Strategic Plan


Global MRO Strategy


A Typical Management SystemObjectives

Development Plans

Succession Plans

Metrics

Individual Goals

Core Competencies

Annual Ops Plan

Strategies

Metrics

EnterprisePlan

People to Watch


Essential Ingredients

• Timelines for the actions• Required resources• Metrics tied to goal accomplishment• Accountability in goal-related initiatives• Training• Trend analysis• Core competencies analysis• Core values analysis• Risk mitigation


The Big Levers

Business Model Organization

Technology

ProcessesSupplier InteractionCentralized vs Decentralized

Intellectual CapitalExperienceRelationshipsOrganizational Influence

MaterialsToolingFacilities


Risk Categories – The Big Three

Financial - from business failure, stock market, interest rates, unemployment, etc.

Project - risks of cost over-runs, jobs taking too long, of insufficient product or service quality, etc.

Human - from individuals or organizations, illness, death, etc.


Other Categories to Consider for Analysis

•Operational - from disruption to supplies and operations, loss of access to essential assets, failures in distribution, etc. •Reputational - from loss of business partner or employee confidence, or damage to reputation in the market. •Procedural - from failures of accountability, internal systems and controls, organization, fraud, etc. •Technical - from advances in technology, technical failure, etc. •Natural - threats from weather, natural disaster, accident, disease, etc. •Political - from changes in tax regimes, public opinion, government policy, foreign influence, etc.


Risk Response

Avoid the risk- Do something to remove it. Use another supplier for example.

Transfer the risk- Make someone else responsible. Perhaps a Vendor can be made responsible for a particularly risky part of the project.

Mitigate the risk- Take actions to lessen the impact or chance of the risk occurring. If the risk relates to availability of resources, draw up an agreement and get sign-off for the resource to be available.

Accept the risk- The risk might be so small the effort to do anything is not worth while.

There are four things you can do about a risk. The strategies are:


Risks, Issues and Opportunities

Risks – Program related activities that might or can go wrong

Issues – Program related activities that have gone wrong

Opportunities – Program related activities that can improve the current program position


Identify AnalyzeAssess

Handling Options

Communicate & Track

Plan & Execute

Risk, Issue and Opportunity Management Process

Set Opportunity

Goals

OPPORTUNITY: What are our program improvement strategies and objectives?

RISK: What could go wrong?ISSUE: What has gone wrong?OPPORTUNITY: What can be improved?

RISK: Likelihood and consequencesISSUE: Severity, urgencyOPPORTUNITY: Likelihood and benefits

RISK: Avoid, transfer, assume mitigateISSUE: Resolve, transfer, assumeOPPORTUNITY: Reject/ignore, monitor, transfer, capture/pursue

HOW ARE THINGS GOING?•Communicate to all affected parties•Monitor Plans•Update status regularly

RISK: Mitigation plansISSUE: Resolution plansOPPORTUNITY: Achievement plansRisk Issue Opportunity


Identify AnalyzeAssess

Handling Options

Plan & Execute

Risk, Issue and Opportunity Management Additional Questions

What can go wrong?-Changes

- Staffing- Process- Design- Supplier

-Transition to production- Test Failures- Failure to meet

objectives- Simulations- Negative Trends

How big is the risk?- Likelihood of occurrence- Possible consequences should the risk occur

- Technical- Schedule - Cost

How can the risk be reduced?- Avoid by eliminating the risk cause and/or consequence- Transfer the risk- Assume the risk level and continue on current plan

- OR – -Mitigate the risk with a step by step plan for reducing the risk level over time

How can the mitigation plan be incorporated?-Determine what planning, budget and requirement changes are needed-Include fallback plans for High risks-Review with management and customer-Incorporate the changes-Follow the plan

Risk Issue Opportunity


Risk, Issue & Opportunity – Template

ActualScheduleComments

Risk Level If Successful

Success CriteriaDate

Action/Event

Risk Reduction Plan

Describe the consequence if risk is realized in this area of the worksheet.

Consequence If Risk Is Realized:

Describe the basic cause of risk in this area of the worksheet.

Statement Of Basic Cause:

Describe the type of risk in this area of the worksheet.

Risk Type Technical Schedule CostCopy this checked box , and paste it over the non-checked box(es) that appear above to indicate which risks apply.

Description Of Risk:

Project Leader:

Date: Project Team: Risk Title:

Risk Worksheet

5

4

1

2

3

1 2 3 4 5Consequence

Likelihood

Click on the appropriate box above and type in a capital X.


Risk Assessment

High

Moderate

Low

Like

lihoo

d

Consequence

1 2

3

4

5

1

2

3 4 5


Opportunity Assessment

High

Moderate

Low

Like

lihoo

d

Opportunity

1 2

3

4

5

1

2

3 4 5

What is the likelihood the opportunity will happen?

Level Planned Approach and Process

1

2

3

4

5

Not Likely

Low Likelihood

Likely

Highly Likely

Near Certainty

Cannot implement this opportunity, no known processes or funding available

Cannot implement this opportunity, but a different approach might

Can implement this opportunity, but workarounds will be required

Have implemented similar types of opportunities with minimal oversight

Can implement this opportunity using standard processes and practices

Like

lihoo

d


Thoughts on Opportunities

• Focus on Opportunities as much as risks

• Set appropriate boundaries

• Focus on creating value

• Use Opportunities for both risk mitigation and innovation

• Use the R’s…Rethink, reconfigure, resequence, relocate, reduce, reassign, retool


Lesson learned

Assign a Risk managerA strategic Role

Create Robust R,I,O plansManage in Program reviews – End to End

Direct SuppliersCritical Raw MaterialLogistics Partners

Always evolve…require all groups to identify RIO’s

Embed Risk Management Activities and RAA into existing processes and FunctionsPlansMetricsBusiness objectivesJob Descriptions

Use Cross Functional teams to manage and resolve Risks


Lessons Learned (continued)

Risk is like matter…..it doesn’t go away

Create a Common MeasureI use dollars

Honor your organization’s sensitivitiesBut maintain consciousness

Be ready for unexpected consequencesBoth good and bad

Understand the impacts to your organization and your customer’sEvolve/adjust simultaneously


Strategic Tests

• Do My Numbers Match My Strategy?• Will It Create Value?• Is It Material?• Is It Just Powerpoint Engineering?• Are We Properly Balancing Change and Risk?• Where Are We On The Strategic Journey?• Is The Problem Solvable And Do We Care?• Why Might We Fail?


Ten Common Reasons Strategic Plans Fail

History People/Culture

Leadership Discipline

Communication Monitoring, Measurement, Feedback

Lack of Flexibility Milestones/Rewards

Bad Planning Bad Plan


Additional Thoughts

Strategy and Strategic Planning is not an EventDon’t Flow Down Strategy Development

Look Outside Of Your IndustryAll Money is Real


An Alternative View


An Alternative View

Failed to Connect the Dots

Number of Dots Number of Possible Links

Number of Possible Patterns

N=4 L=6 P=64

N=10 L=45

Dots

Links

Patterns

Number of Dots Number of Possible Links

Number of Possible Patterns

N=4 L=6 P=64

N=10 L=45 P=3.5 Trillion

N=12 L=66 P=4,700 Quadrillion

L=N(N-1)/2 P=2

The Rule of 5, 15 and 150


An Alternative ViewKey language –

A system is any network that has coherence. It may be fuzzy, it may or may not have purpose

An agent is anything which acts within the system - individual, group, idea etc.

Three types of systems-

Ordered: system constrains agents, reductionism & rules based

Chaotic: agents unconstrained & independent of each other

Complex: system lightly constrains agents, agents modify system by their interaction with it and each other, they co-evolve (irreversibility).


Aspects of complexity

Characteristics– Highly Sensitive to Small Changes

– Proximity & Connectivity of Agents Has High Impact• Informational and Organizational

– Meaning Emerges Through Interaction• Use of distributed cognition – The wisdom… not foolishness of crowds

– Hindsight does not lead to foresight

– Shift from fail-safe design to safe-fail experimentation


The Cynefin Framework

Chaotic

Complex Complicated

Simple

ActSenseRespond

ProbeSenseRespond

SenseAnalyzeRespond

SenseCategorizeRespond

HierarchicalOrg

NetworkedOrg

ExpertOrg(Emergent) (Good Practice)

(Best Practice)(Novel)?

Exploration Exploitation


Leadership Actions - OrderCharacteristics The Leaders Job Danger Signals Response

Repeating patterns andconsistent events

Clear cause & effect

Relationships evident to everyone, right answers exist

Known knowns

Fact-based management

Sense-categorize-respond

Ensure that proper processes are in place

Delegate

Use best practices

Communicate in clear direct ways

Understand that extensive interactive communication maybe necessary

Complacency and comfort

Desire to make complex decisionsSimple

Entrained thinking No challenge ofreceived wisdom

Over-reliance on best practice if context shifts

Be patient and allow time for reflection

Use approaches that encourage interaction so patterns can emerge

High turbulence

No clear cause and effect relationships, so not point in lookingfor right answers

Unknowables

Many decisions to make and no time to think

High tension - Pattern based leadership

Act-sense-respond

Look for what works instead of seeking right answers

Take immediate action to re-establish order (command and control)

Provide clear, directcommunication

Applying a command and control approach longer than needed

“Cult of the leader”

Missed opportunity for innovation

Chaos unabated

Set up mechanisms (parallel teams) to take advantage of opportunities afforded by a chaoticEnvironment

Encourage advisers to challenge your point of view once the crisishas abated

Work to shift the context from chaotic to ordered

Sim

ple

Com

plic

ated


Leadership Actions – Un-orderCharacteristics The Leaders Job Danger Signals Response

Flux and unpredictability

No right answers, emergent instructive patterns

Unknown unknowns

Many competing ideas

A need for creative and innovativeApproaches

Pattern based leadership

Probe-sense-respond

Create environments and experiments that allow patterns toEmerge

Increase levels of interaction andCommunication

Use methods that can help generate ideas, large group methods, encourage dissent

Temptation to fall back into habitual command and controlMode

Temptation to look for facts rather than allowing patterns to emerge

Desire for accelerated resolution of problems or exploitation ofopportunities

Create communication channels to challenge orthodoxy

Stay connected withoutMicromanaging

Don’t assume thingsare simple

Recognize both the value and thelimitations of best practices

Expert diagnosis required

Cause and effect relationshipsdiscoverable but not immediately apparent to everyone, morethan one right answer possible

Fact basedmanagement

Sense-analyze-respond

Create panel of experts

Listen to conflicting advice

Experts overconfident in their own solutions or in the efficacy ofpast solutions

Analysis paralysis

Expert panels

Viewpoints of non-experts excluded

Encourage external and internal stakeholders to challengeexpert opinions to combat entrained thinking

Use experiments andgames to force peopleto think outside thefamiliar

Com

plex

Chao

tic


Principles of Knowledge Management

• Knowledge can only be volunteered it can’t be conscripted

• We only know what we know when we need to know it, we are pattern based intelligences not information processors

• In the context of real need, few people will refuse to share their knowledge

• Tolerated failure imprints learning better than success

• The way we know, is not the way we say we know

• We always know more than we can say, and we will always say more than we can write down


Shifting From Leader to Facilitator

Leader Facilitator

Concerned with doing the right thing Concerned with helping people do things

Takes the long-term view Helps people find a view and articulate it

Concentrates on what and why Helps people concentrate and be clear in the here and now`

Thinks in terms of innovation, development, Helps people think, and helps them communicate and the future their thoughts

Sets the vision: the tone and direction Helps people make meaning of tone pace and direction, and to function well at the required pace

Hopes others will respond and follow Hopes others will engage in the process

Appeals to hopes and dreams and defines limits Helps others make meaning of hopes and dreams; pushes appropriately on boundaries

Expects others to help realize a vision Helps others articulate a shared vision and common mission or purpose

Inspires innovation and invention Helps people respond to things that are new and things that remain the same

Source: Ron Scott, Scott Associates 2008


The Facilitation Model

Task

Self

Group

Process

Every action facilitators take should help groups move closer to completing that task. Facilitators constantly ask themselves, “Is this action going to help the group complete its task?”

Facilitators must know themselves and how they impact their groups. They frequently ask themselves the question, “What do I think is going on here? How do I feel about what is happening at this moment?” They occasionally share the answer to this question with the group—if it will help members complete their task.

They help people become more aware of how they are functioning and help them take steps to improve. Underlying all of this is a continuing focus on task. The normal emotional energy available to people becomes a practical asset in helping get the work done.

Process is a set of actions or tools, an exercise, or an intervention that helps groups progress toward their goals. The three fundamental facilitation processes are planning, solving problems, and finishing work.

Source: Ron Scott, Scott Associates 2008


Actions of an Inspiring Leader• Inspirational leaders…

– Use a sense of purpose to motivate their employees to go beyond the normal call of duty

– “Sincerely” engage the spirit, mind, body and heart of each individual on their team

– Inspire trust within their organization

– Energize, excite and motivate others

– Understand that everyperson is an individual with unique personalities, talents, values and motivations

Leadership

TaskWork Environment

Employee

Emotional EngagementIntellectual Engagement


Random Thoughts

• Innovation Comes from Failure with Resilience• Prevention of Failure vs Realize, Absorb & Recover From

Failure• Tolerance of Failure is the Measure of Health of an

Organization• Empirical Knowledge vs Coherence vs Gut Feel• Attention is a Leading Indicator- Compliance is a Lagging

Indicator

I learned how not to invent the light bulb 10,000 times – Thomas Edison


Going Forward• Recognize the system you are

managing….and operating in

• Recognize your own capabilities and the capabilities of others

• Create channels of communication to challenge orthodoxy

• Resist the temptation to fall back into

habitual command and control mode

• Recognize the need to evolve


Recommended Reading

The Mind Of The Strategist Kenichi Ohmae

Outliers Malcolm Gladwell

The Black Swan Nassim Nicholas Taleb

www.cognitive-edge.com David Snowden

The Whiz Kids: The Founding Fathers of American Business - and the Legacy they Left Us John A Byrne

http://www.cognitive-edge.com/

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